Restraint of trade agreements are common in many industries, including in South Africa. These agreements typically restrict employees from certain actions after leaving a company, such as working for a competitor or soliciting clients. However, such agreements must be carefully crafted to ensure they do not violate employment laws.
In South Africa, restraint of trade agreements are regulated by the Labour Relations Act (LRA) and the common law. The LRA requires that such agreements be in writing and signed by both the employer and employee. The agreement must also be reasonable in scope and duration, and must not be contrary to public policy.
One of the key factors in determining the reasonableness of a restraint of trade agreement is the nature of the industry and the employee`s role within it. For example, a salesperson may be restricted from soliciting clients for a certain period of time after leaving their employer. However, a highly skilled specialist may be able to argue that a broader restriction on working for a competitor would be unreasonable.
Another important consideration is the duration of the restraint. While a longer restraint may provide more protection for the employer, it may also be seen as overly restrictive for the employee. A court may consider factors such as the employee`s seniority, the length of time they worked for the employer, and the difficulty of replacing their skills when determining the reasonableness of the restraint`s duration.
It is also important for employers to ensure that the language of the agreement is clear and unambiguous. Ambiguities or overly broad language may lead to the agreement being deemed unenforceable. Employers may also need to consider whether the agreement could be seen as an unfair labour practice or a form of discrimination against certain employees.
In conclusion, restraint of trade agreements in South Africa must be carefully crafted to ensure they are both enforceable and compliant with labour laws. Employers should seek legal guidance when drafting such agreements to avoid potential legal challenges from employees. It is important to strike a balance between protecting the employer`s interests and not unduly restricting the employee`s career opportunities.
